>> super thursday, the city braces it self for a slew of data as the bank without its minute and forecast. rio tinto a 43% slump and iron ore prices collapse. egypt opened $8 billion extension to the swiss -- suez canal. can the new route turn things around? ♪

francine: welcome to "the pulse or call -- "the pulse." super thursday has been dubbed the thursday of the year. the bank of england is said to publish a slew of data. the boe decision minute of it meeting are being released at lunchtime as the governor mark carney works to improve transparency. in this torrent of data, how many members are we expecting to call for an interest rate hike? >> that is the big question. the majority of economists do expect a split in the vote. there are nine members. 19 of the 20 economists surveyed

by bloomberg expect if it -- expect a split. more than half expect to members to vote for decision. we have seen some vote for tighter policy, they dropped that in january when they all inflation fall. they will be closely watching to see of any others vote. francine: the strength of the currency is also compensating things for the governor. >> absolutely. this is a tight rope he will have to walk as he delivers his press conference. the pound in the past month has been strengthening against most of its closest peers, in the past three months it is the only major currency out of 16 tracks

by bloomberg that has actually strengthened against the dollar -- 16 tracks up by bloomberg that has actually strengthened against the dollar. a stronger pound could way on inflation. it could also affect exporters. u.k. factories have reported lower export demand. that is what mark carney will have to balance today. any comments he makes and any voting, any decision, we are expecting the rate to stay anywhere record low. any voting and comments from carney you will have to watch closely about the effect on the pound. you could see a lot of volatility after the deluge of data at 12:00. caroline: thank you. the bank of england will be replacing -- releasing a flood of data at midday.

what does that mean to analysts? one market pro breaks it down. >> you'll get that initial reaction boom from the vote. then they will start coming over saying it is more dovish. you will get a secondary reaction, that is why it is volatile. david: are we going to get a plethora of data which will slam into the market. we could get big moves. we will see in the future how important the data is. this is a day that moves markets much like in the u.s. we have the payrolls. i think the main thing to look for is the vote. what is the answer, what is the number?

what has happened with the forecast? have they raised it? the minutes will be about the urgency. if it is 6 3 you go in saying how close are they? you say what are they forecasting? we start getting down to the details. i think this is a people driven day. there is so much information. can computers compute information faster than a human, of course. an algorithm has to learn from people. i think it will take three or

four of these for the algorithms to kick in. >> all of that brings us to the question, will super thursday helped ease market volatility? not all are convinced. some are concerned about information overload. when will the boe increase interest rates? speculation has been growing. here is what mark carney had to say. >> once monetary policy normalization begins, interest rate will proceed -- rates will proceed slowly and rise to a level in the medium term that is half as high as historic averages. in my view, the decision as to win to start such a process will likely come into sharper relief

into the turn of the year. francine: the next guest believes we will see the rate rise. mike, great to have you. how would you trade these markets into 12:00? mike: obviously carney has become more about bush -- we have been cautious -- mark carney has become more cautious. we felt we got rich on evaluation. -- a valuations. francine: how do you look at the pound? >> we look at the strength of the pound, and the labor market data. i think the argument they will make i am not entirely sure i agree the argument they will

make is the strength of the pound fx sterling over the next 12-18 month. when you look at the back end of the forecast, that will be the strength of the domestic economy and the labor market which will dominate the inflation forecast. i suspect that is how they will play it. they have made comments on it. i think that is the way they will do it. they have one target, it is inflation rate. core inflation is below 1%, headline will probably go negative. i personally do not see why they are in a rush. that seems to be the way they want to play it. francine: you are expecting the first interest rate rise in february or march of next are -- next year. >> either february or may. the reason we are cautious is not so much about the first rate hike when it comes, it is more

we are cautious on the level of intermediate yield. you look at the tenure below 2%. -- 10 year below 2%. a lot of it is about risk premier as we move into the hiking cycle, rather than when they pull the trigger. we would argue whether there is too little of risk premier weather than betting on the individual month. francine: how many members are expected to be hawkish? if you get three or four does it change the view? mark: we will probably get a couple maybe three. the key is the composition of who votes for what. all of the dissenters are likely to be from the independent on the bank of england.

you have five internal members and for external, you need to shift one of those five. my instinct is the governor will be quite keen to manage his block of five as one over this appearance. if we were to give sentencing, it would be a big deal. francine: in june we heard about turmoil in greece, that was the only factor holding back some members from voting for an increase. since the turmoil in china, they must looking at this, trying to figure out what it means for global growth. mark: there is always a part of the world looking in a tougher state. greece is on our doorstep with

the eurozone being our largest trading partner, that is why that worried them. with china they have not been a major trading partner. the volatility has been focused on the stock market, rather than the property market. my suspicion is they would downplay the risk, having played of the risk of greece just because of the risk being in the eurozone. i do not think they will play china as a big deal. francine: will we close the gap between the tenure guild -- tenure guild and u.s. treasuries? mark: that has been stable. it is trading 30 basis points below. i will slip -- i suspect we will

continue to trade below. a lot of that is in relation to what kind of rate cycle we can expect. in the u.k. it has been a hundred 30 basis points -- 130 basis points. fed rate cycles tend to be bigger. the u.s. rate structure will probably stay above the u.k. for the time being. we might see a bit of a convergence, but it relates to how much of a rate cycle we will get. the transmissions mechanism is cleaner. the short-term variable-rate mortgages are either short-term fixed. francine: outside the u.k. we see so much government debt that is in negative rate territory. why is that?

mark: i think one is the ecb is continuing its program until september of next year. this falling commodity price further pressure on headline inflation rates. it relates to commodity prices and the ecb, i am not sure that will change soon. francine: thank you so much for that. we will be covering the bank of england's announcement at 12:00. here is a look at what else is on our radar. rio tinto has reported a 43% drop in profit after iron or prices collapsed. and $8.2 billion expansion of the suez canal opens today.

dignitaries are expected to attend a lavish party. the project has been completed two years ahead of schedule. aviation investigates say the debris washed up on the island is from the missing malaysian airlines plane. the malaysia prime minister made the announcement validating. that the plane crashed in march of last year. >> the uncertainty faced by the families during this time has been unspeakable. it is my hope that this confirmation however tragic and painful will at least bring certainty to the families and loved ones of the 239 people on board.

they have our deepest sympathies and prayers. francine: millions of londoners are having to deal with the second q strike in a few months. workers are staging a 24 hour walkout. >> london is looking at this -- it is a great deal. it is more jobs, more pay. we deliver a 24 hour tube for london. francine: why there is mining misery for rio tinto. keep it right here. ♪

francine: welcome back, we are live on bloomberg tv and radio. the world's second-largest mining company, rio tinto has posted a 43% drop in their first half profit. rangold reported earnings that came in line with estimates.

we are told it is a good result. >> the profits up slightly. earnings of 8% -- of the present. it is a good, solid performance. francine: for more information we are joined by jesse. jesse, we have had a huge rise in commodities. jesse: rio tinto was 43% down. they also produce aluminum coal, and copper those commodities are also affected. beating estimates, i fairly strong beat -- a fairly strong beat. they hit a six low at the end of last month.

i think the market is grappling with the bearish forecast. francine: they have to convince shareholders it is worth sticking around. jesse: they have been cutting costs, they did a share buyback halfway through. there was an estimate that cost savings could underpin another buyback mixture. -- next year. perhaps that you may gain traction as the year goes on. francine: what are we expecting from bhp? jesse: you can probably expect a similar result. they have exposure to the energy space. it will be fascinating some have a big marketing division

and they said that will help them offset. the big focus will be on how successful has the marketing division been? francine: it is all about china. jesse: that's right. a colleague said intel he market starts to see a reversal in some of these economic data points out of china, it will be difficult for mining companies to get attention from the wider investment community. francine: thank you. up next, egypt opened its expansion of the suez canal, we look at the numbers involved next. ♪

francine: welcome back to "the pulse." here are the top headlines. adidas failed to hit the back of the net with profit. the ceo is wearing money into marketing in attempt to close the sales gap with nike. hiroshima is marking the anniversary of the atomic bomb attack. caroline kennedy was there with

around 100 world leaders. bells ring out at 8:15 local time. a trial of a man who organized a killing has been adjourned. he is charged with failing to prevent an unlawful hunt. he says he did not do anything wrong. cecil was a protected lion prosecutors say he was lured out of the safe area to allow the dentist to shoot him. cecil was seriously wounded by an arrow and finished off with a gun. a $8.2 million expansion to the u.s. canal was completed. the project has been completed two years ahead of schedule.

>> it is one of the most important trade routes in the world 150 years after it first opened, it is expanding. in the 19th century the suez canal took 10 years to build, thousands of workers lost to lives. the link allows ships to travel from europe to asia. about 8% of the world cargo passes through the canals. the suez canal authority says the expansion will raise capacity and shorten journeys. it has not said how it plans to recoup the $8 billion spent on the project. perhaps a bigger problem, shipping has dropped 20% after the global initial crisis -- financial crisis. according to analysts it would

need to drive 9% a year for suez to reach its goal. francine: why eddie does it to score with the latest results. -- why ideas -- ♪

francine: welcome back to "the pulse." we are just getting some breaking data out of the u.k. this is still important nonetheless. let's go straight to caroline hyde. caroline: this is an outlook on how the economy has performed in june. it is a miss on the industrial front. industrial production actually falling for the month of june down from 0.4%. the estimate had been for slight growth. disappointment on the industrial

reduction side. oil and gas had been the bone in previous months. maybe that area slowing down. meanwhile, manufacturing on the flip side has slightly beaten animist estimates. the estimate had been for half of that month for month. looks as though the pound is reacting in terms of disappointment from the industrial front. i'll show you the pound against the dollar, down in negative, having been higher today. so much anticipation ahead of super thursday, the monetary policy committee results. will we see any hints that they will be looking to raise rates? this is what the pound is doing versus the euro. still higher. francine: caroline, thank you. caroline hyde with the latest on this breaking data out of the u.k. tesla has cut its full-year

sales forecast. the company now aims to deliver 50,000 to 55,000 cars this year. the ceo also says tesla is facing challenges on the model ask, while shares fell in after-hours trading. rio tinto as reported a 43% drop in first-half profit after iron ore prices collapsed. profit fell to $2.9 billion from $5.1 billion a year earlier. the bank of england will announce its interest rate decision later together with minutes of the meeting and quarterly economic forecast. this is the first time the central bank has scheduled simultaneous publication of all the data. governor mark carney believes this will make the process more transparent. our next guest is not expecting a lot today. he manages 86.3 billion pounds.

great to have you on the program. bank of england this is revolutionary. it is also revolutionary because this is when interest rates could start creeping higher. if you are a traitor, or and in -- a trader or an investment officer, this is a lot to digest very quickly. >> it is. probably why he's picked august to do it. it is a relatively quiet month. most people are not expecting a rate rise. we don't expect a forecast rise today. i think the more interesting thing will be to see whether the asset purchase is adjusted at all. if you think about how the fed responded in terms of dialing down qe before a rate rise, what the market hasn't thought about is why we continue to pump up the system and raise rates at the same time. we might look to see if there's

an indication of an early move in that area. what i would say is that, we do think there are increasing inflationary pressures in the u.k. economy. that's partly a reflection of a year on year run rate of a lower oil price and the effect that feeds through to consumers. a rising oil price is a tax in developed markets. we see that benefit starting to feedthrough. one unusual index we follow white closely is the income tracker. it is an interesting index. it basically measures disposable income that consumers have to spend on nice things. what that shows is a 10% rise year on year in terms of personal consumer spending potential. also, the thing we would watch at this point for the bank of

england is, wage inflation. that has been the last domino to fall from yellen's perspective and carney's perspective area -- perspective. francine: when are you expecting an interest rate rise? does it mean i will be a little worse off and does it mean that as chief investment officer you may stay out of discretionary funds? >> all indications have been that we expect a slow rise in rates. that has been the clear steer. in terms of providing nasty surprises to markets, broadly speaking, yellen and carney have been careful to provide some gardens -- some guidance. what i think we expect is, what we will start to see indications of a rate rise. what does that mean for you? i don't think it means that much in the short-term.

if you look at mortgage rates most consumers have been increasing their fixed-rate mortgage. there's a variable element, but a small rise, given my point about the rise in disposable income, people probably wouldn't notice a material change in a quarter-point rise. francine: what does it mean for the markets? >> gilts have already started to price in expectation of rate rises. depending on which way you choose to measure that, some go for march, some go for may, we think there is an outside chance of a rise at the backend of this year. we still expect the fed to go first. our economist has been more bearish. the rest of us think near the back end of the year. i think carney follows thereafter. francine: thank you so much for now. piers stays with us and we will be talking about stock next.

adidas has missed estimates. they are struggling to match the man's from last summer's world cup as the company tries to close the sales cap. hans nichols has the latest from berlin. the bar was set quite high. hans: the expectation was for a big profit. profit came in just one million short. not a huge miss. stock is trading up this morning in part because they had good overall revenues but also they are talking about a plan for tailor-made. this has been leading some of their losses. when you look at their brand, you see just what a problem golf is for adidas. you have id, the actual brand, even reebok has had its struggles, but then you have the tailor-made unit down 26% on the year. they are talking to an investment bank, exploring options about what to do

possibly sell that unit. the question is, how much is it worth and what do investors think? this is a company that is in transition. they want bigger market share in the states. you look at where they are in the states. they are clearly in second place. they are in danger of falling to a third-place in some categories. their strategy, they do want to focus on six trendsetting cities. we are a couple months in. it is almost too early to tell. the cities, not berlin. francine: not very cool runners but at least you are runners which some people aren't at all. adidas also announced it has acquired a mobile app for an enterprise value of 220 million euros. why? hans: they are getting a bunch

of users, 70 million users. but adidas is linked to this game. under armour went on a shopping spree last year and bought $560 million in different apps. everyone says you need to connect your shoes with your heart with your wrist. that is what these apps do. it looks like adidas is at the table down. they are late to the game. we've had all kinds of earnings this morning in germany. deutsche telekom, they had a 13% increase in revenue. francine: hans nichols in berlin. piers is still with us. if you look at some of the stocks, a lot of these names are on huge cost cuts. then you have the commodity rout and m&a is back. how do you pick stocks? >> it comes down to capital versus the cost of capital. looking for businesses that make positive spreads.

you can behold into believing that some business models are stronger than others. the one thing we talk about regularly is recognizing the interest risk -- the increased risk. you are starting to see that in some of the mining stocks. you've seen it in some of the oil plays in the u.s. i think we will start to realize that and see more companies moving into chapter 11. there is an opportunity for m&a. we continue to watch that space. not just the mining, but what i think you are seeing is a bit like adidas this morning. the need to strengthen the relationship with the customer. they always prided themselves on the high-quality of their sports apparel. ultimately, it is the relationship with you and i as consumers.

it is a reflection in some ways of how consumer trends are changing. francine: is there a danger that you catch onto something where valuations are too high? everyone is talking about apps. how do you stay away from too big valuations? can you stay away from them and focus on some that are undervalued? >> it is a high-quality business. it has a lot of the metrics that you look for as an investor. it is a 5% miss this morning. when you are modeling your potential returns, not only is it just the short-term, the one thing i haven't got to the bottom on yet is how much of that is currency. i know they are danish krone, but that does peg with the euro.

if it is that much of an impact you are concerned. there have been significant expansions. that classically is a warning sign in terms of reaching a peak in the bull market. where earnings stabilize is a warning sign. i think that is what we would watch. are businesses over-leveraging themselves? francine: thank you so much for all that knowledge. now, millions of londoners are having to deal with the second tube strike in as many months. members of four unions are staging a walkout, seeking a better deal for operating all-night service which has been proposed by mayor johnson. >> londoners would be amazed that this is not being properly considered by the workforce. it is a great deal.

big bonuses for drivers and station staff. more jobs, more pay. and also, we deliver a 24 hour to the london. >> i think there's political games going on here. of course you've got two possible candidates for leadership of the party playing political games as well. they haven't even sorted out safety maintenance on the tracks. even if we agreed to everything this couldn't go ahead for some time. francine: we will have plenty more on this. up next, tesla tanks. the electric car maker tumbles in extended trading. what is troubling the company? ♪

>> considering the current market situation, the low level of rights that will continue, we want to identify actions especially on the cost side that can help to maintain our targets . [indiscernible]

i cannot make any specific anticipation. francine: that was the ceo of italy's biggest bank unicredit on cutting costs to revive profit. here are some of bloomberg's other top stories. hiroshima is marking the 70th anniversary of the atomic bomb attack. prime minister shinzo abe a and u.s. ambassador caroline kennedy were there with thousands. bells rang out at 8:15 local time, the exact moment the bomb exploded over the city in 1945. prime minister abe called for a world without nuclear weapons. >> this year marks the 70th anniversary since the nuclear bombing. at the meeting of the treaty on the nonproliferation of nuclear weapons, unfortunately, we were able to reach a final agreement. japan will continue to call for

the cooperation of countries that have nuclear weapons and those without. i'm determined to step up efforts to realize a world without nuclear weapons. francine: president obama has launched his defense of the iran nuclear deal saying its critics are the same ones who argued for the war in iraq. >> between now and the congressional vote in september you are going to hear a lot of arguments against this deal. backed by tens of millions of dollars in advertising. if the rhetoric in these ads and the accompanying commentary sounds familiar, it should. for many of the same people who argued for the war in iraq are now making the case against the iran nuclear deal. francine: tesla fell as much as 9% in extended trading after the electric carmaker backed off its

sales forecast. caroline hyde is we're with the latest. not looking good for the carmaker. caroline: the reason is full-year forecast. that shook the investor base. 55,000 is what they promised in full-year sales. it is now 50,000 to 55000 of the model s and model x. investors are slightly worried about the ramp up if they are already having to cut full-year sales. they also scaled back on 2016 production. initially, they said we will be pumping 2000 cars per week. they scale that back to 1600-1800. is that a concern, that they are trying to recalibrate their own aspirations? that is what people are getting nervous about. what about capital raising? what about selling more shares?

is this why we saw the shares surge down? he saying, at the moment we don't need to raise equity capital. let's get on to what is behind all these cuts to production outlook and sales forecast. it is difficult making these teslas. there is supply concern. the new model, the model x if you start to get disruption to the supply chain, not only does it hurt your new model, it also hurts your current model. they share an assembly line. if we have a disruption, that could reduce output by 800 vehicles. it is very technically difficult, they say. it is the hardest car to build in the world. the biggest challenge is the second row seat. they are on track to deliver this by september.

there's other areas of optimism cited by elon musk. he's confident that by 2020, they will be pumping out half a million cars per year. 600 cars were made per year five years ago. now, it takes just three days to make 600 cars. he's also sounding optimistic in other areas. they will be cash flow positive by the first quarter of 2016. there's some optimism for investors. also, this isn't just about luxury electric vehicles. this is a man getting into batteries. he's making the biggest battery factory in the world a giga factory is what it is called. it will be online for production next year he says. and competition. what about driverless cars, what about taking on uber? he refused to answer that

question. many people, tongues wagging about what elon musk could be up to next. francine: thank you, caroline hyde. after the break, we have a special report on the railway linking china's east coast to the west. ♪

francine: welcome back to "the pulse."

china's appetite for truly global tastes is being satisfied thanks to the world's longest railway. it runs all the way to western europe and is opening new opportunities through speed and security. >> all aboard the silk rail. this train links china's eastern sores to the iberian peninsula and it carries the best of europe. as william shakespeare said, sherry -- today, that train travels all the way. spanish wine and olive oil are also destined for new consumers in china. we offer these products to popularize spanish culture and cuisine. after they arrived in china, we find agents to help us distribute them. >> the european link is key for china.

previously, the only regular rail service ran only as far as germany. this longer link cements china as the largest trading partner outside the eu. the journey is almost 13,000 kilometers across eight countries. it takes between 18 and 21 days. that saves about 10 days in shipping time and poses fewer security issues than going by c. >> the route passes some extremely sensitive areas. one implication, if these are destabilized, it will have a negative impact on china's growth. >> the trade-off, it is estimated that putting a container on the train cost around $5,000 more than taking it by c. some might say that is a strong -- a small price to play for spanish sunshine in a bottle. francine: opening up opportunities.

for those listening on bloomberg radio, "the first word" is next. for our heroes, a second hour of "the pulse" is coming up. ♪

francine: super thursday. the city braces itself. they will put out the rate decision, minutes, and forecast at the same time. a 43% profit as china's steel industry flows. get a new return the country's profit around? good morning to our viewers in europe.

good evening to those in asia. good morning to those waking up in the united states. i am francine lacqua. we will be joined by kevin daly. it is super thursday. we have greek unemployment figures to get to. let's get to caroline hyde. caroline: it is one in four unemployed in greece. it is that her than estimated 25% unemployed on the nose is the rate of unemployed. for youth unemployment statistics have shown that it is likely much higher. let's look at how the euro is react inc.. the euro is remaining lower. it has been quite a rough ride for the euro. it is up 2% for the month of june. much more than many had anticipated.

euro trading is what's again lower as we see one in four unemployed and greece. i want to show you greece stock. we are starting to turn around. opening on monday with phenomenal falls in the afc index, the greek stock index. today, we start to turn higher. the national is up 25% this morning. we have only 8 stocks in the red. we are seeing a little bit of picking off the bottom when it comes to greek stocks. we're still seeing one in four unemployed in the country itself. francine: today has been dubbed super thursday with the bank of england publishing and i'm presented volume of monetary policy information at the same time. inflation reports are being released at lunchtime. governor mark carney is working

to improve transparency. they are in a torrent of data. how many mpc members are we expected to see call for a rate hike? >> this is a big question. 19 out of 20 economists surveyed by bloomberg do expect a split in the mpc vote. out of the 9 members, half expect to devote for rate increase, and one economist expects as many as 4 to vote for the rate increase. last year we saw martin weale and ian mccafferty calling for a policy. they are the 2 that economists are most expecting to vote for rate increase. in general we are expecting some sort of split. francine: the strength of sterling has been complicating

things for mark carney. how will that be taken into account when looking at interest rate settings? >> mark carney will have to walk a tightrope with sterling. it has been strengthening in the past few months on expectation of title policy. why gets are fully pricing a rate increase in may 2016. with sterling, it is a stronger pound would only way on inflation and hurt exporters. mark carney will have to be careful in the way that he catches things in his press conference to avoid sterling to come into strong and i'm doing -- and undoing the point of having a rate increase because of a stronger economy. we are seeing pound volatility because of the data we are going to get. francine: a lot of people are

pro-this because it adds transparency. others say because there will be so much released at the same time traders may miss the key economic things the bank wa nts to push through. >> it is difficult to say how this will work out. it is unprecedented -- releasing the decision, minutes, and inflation report at the same time. we could see a lot of pound volatility at 12:00 when the data is released. the point of releasing it at the same time was to avoid volatility in the market the between each data release every two weeks or every month which is what we have seen in the past. there are a key things to watch for. the vote how they are split, if they are split who voted for rate increase if anyone does.

then it will be washed to see what the bank of england says about medium-term inflation and wage growth. finally investors will be listening to the finer points in mark carney's press conference at 12:45. c say about the impact of what is happening -- what does he say about the impact of what is happening domestically? as well as externally? francine: the bank of england will be releasing this data. what does it mean for traders and analysts? they haven't asked to decode it all at once. >> you look at the initial reaction from the vote. then the analysts will start coming over and saying that it is more dovish or more hawkish

than we thought, and then is when you will get a second reaction. that is why it could be more volatile than we thought. you'll get extra data slamming into the market. we will see in the future how important the date is. whether the options market in the future prices this aaron as an expensive day that moves market, much like in the u.s. when you have the payrolls. what is the vote the answer, how they vote, more or less? straying into the minutes, the discussion. what has happened with the forecast? have they raised the gdp forecast? i think the minutes will detect the urgency we have to dig down.

you are going in there and saying, how close are they to swinging this decision? let's see what they are saying they're forecasting, the process. we start emergency drilling down into the details. there is so much information. you may argue that computers can process information quicker than humans, that the point is, what should we look for in their secondary or primary reaction. algorithms learn from people. it will take three or four of these events before the algorithms kick in. francine: now for more on what to expect we are joined by a senior european economist kevin daly. it will be stressful for a lot of traders who have never done this.

kevin: it is very stressful for him. francine: david bloom is usually on edge anyway. what if we see members become hawkish? kevin: there are increasing sides of division within the committee. there are 2 members that have signaled they are likely to vote for higher rates. david was saying he could have a cup of tea if there was a 9-0 vote. they would be a big market reaction to that. most think there'll be 2 floats for a higher rate. against that you have the governor who signaled recently that he would not seriously consider raising rates until the turn of the year. i don't think he would've said that unless he felt he had the support of the majority of members within the committee. we are on the relatively dovish

size and we do not -- side and we do not expect a rate hike into the second quarter. the importance of the vote relative to the message within the inflation report. we have seen in the past, a minority vote in one direction or the other is not a good predictor of where they will go next. francine: what if we get 4? if we get two ok. if we get 3 -- kevin: people will still dismiss that to some extent. if it is 4 the would be taken hawkish leaf. we are predicting where race are likely -- where rates are likely to go. focusing on the inflation report rather than the vote. i do that know if that is what the market will focus on today.

the vote drives the initial market response. francine: why are you so dovish? it is not unlike what we are seeing from the fed in the u.s.. kevin: the fed is zero. given the weakness of oil prices, the strength of sterling . second, the strength of sterling. it has risen 5% in the last three months since the last inflation quarter. that is enough to knock as much as .2 off of the inflation forecast off of the two-year horizon. it has risen 10% in the past year. the third is wage growth. wage has risen and that activity has picked up and labor cost inflation is slightly weaker

than they are anticipating at this time three months ago. let's focus on growth. we have long been more optimistic on growth. at the moment growth appears to be moderating. decent but not spectacular. francine: we're expecting them to inch up inflation. if we have higher gdp it cancels it out. kevin: we're not expecting big changes on the growth forecast. we have been expecting more changes on the inflation forecast. the near-term inflation forecast we are expecting to be much weaker. we expect that to be somewhat lower as well in the two-year and beyond. the vote could be hawkish, but the body of the report looks more dovish in our review. francine: what is the gap

between the 10-year yield in the u.s. treasury begin narrowing? kevin: we have been on the dovish side of the fed and the bank of england. our call is that they will -- the fed will start raising rates in september. if that does happen in september that is an implication for the u.k. as well. the bank of england is keen to express there is no mechanical reaction from them as to what the fed does. where i think there is a sensitivity to the fed's action is when the fed and the bank of england are the only central banks looking to tighten. others are still easing aggressively. francine: stay with us and we will talk about the fade in the future of the central banks. -- the fed and the future of the

central banks. all of that brings us to today's twitter question. will super thursday in use market volatility, or is it a little concerned because there is a lot of data to process for the market. you can tweet me. i am @flacqua. underlying profits of $2.9 billion in six months to the end of june. and $5.1 billion a year earlier. an expansion to the suez canal opens today. the french president will attend a lavish party to mark an occasion hiking the government.

aviation investigators say debris that has washed up on reunion island is from the missing malaysia airlines airplane. the wing has been tested by experts from malaysia, france, and following -- and boeing. >> it is my job that this confirmation, however tragic and painful, well at least bring certainty to the families and loved ones of the 239 people on board mh-370. francine: millions of londoners are having to deal with the second tube strike in as many months. members are staging a 24-hour

walkout for better operating and online service, which has been suggested by the mayor. >> they would be amazed that this is not being properly looked into. it is a great deal. the drivers and the station staff. 137 drivers to do it. it is more jobs, more pay, and we did 24-hour to us in london. francine: we will be looking at more details on super thursday and if the torrent of data will lead to more transparency or lead to messages being lost. ♪

francine: welcome back to "the pulse." live in bloomberg's european headquarters in london. we're back with goldman sachs' chief economist. you talked about super thursday. it boils down to mark carney revamping and modernizing the bank of england to be more accessible to the person on the street. for markets and traders will this be more difficult? is there a danger that key messages will be lost? kevin: the problem is that there has been a pattern since the financial crisis where the

inflation report was more dovish than the minute. if you waited for the minutes you got a different impression of the meeting rather than the inflation report. linking the two together will make the task between 12:00 and 1:00 more complicated in the short-term, but we will get an overall picture much sooner than previously. francine: we have had other central banks revamping their communication. we are expecting the doj from january 2016 to be more transparent and giving out forecasts quarterly rather than die annually. is it the times because we are in unprecedented monetary policy . the risk is greater so communication has to be greater? kevin: everyone was concerned

about meetings generating volatility. there was not a big decision to take it every meeting. moving wagers is a fair practice the ecb has. it is a sign of the times. to focus on the bigger decisions. given the additional tasks the bank of england has, having 12 meetings a year was complicating and adding to the workload for the governor and for the senior members of the bank of england. i think there was a practical reason for doing this. francine: i know you are more on the dovish side for the bank of england. is the danger for mark cranny being on autopilot? -- for mark carney being on autopilot? kevin: we've always thought they were more affected than

quantitive easing. quantitive easing between 2009 and 2012 was an effective in turning the economy around. you generate a lot of liquidity but that accumulated on thanks balance sheet -- on bank's balance sheet. when mario draghi had commitment both those factors contributed to driving down funding costs and encouraged them to lend again. that is what turned the economy around. to argue that nothing has been happening in the policy sphere -- francine: the groundwork was laid. my more pressing point, is there a danger that rate hikes have been too soon, or is the danger we leave it too long? kevin: we say we have the

forecast of the first quarter of next year. we are later than most because there is the view that you had a big tightening and financial conditions already driven by the strength of sterling. that will contribute to lower inflation and growth going forward. in an environment where growth is moderating anyway, it is not as if there is a runaway economy that will likely generate a rapid buildup of inflation in the future. there has been a moderation in growth. there is more risk of going to sue and there is in delaying this until next year. francine: thank you. kevin daly from goldman sachs. here are bloomberg's top headlines. hiroshima is marking the 70th anniversary of the bomb attacks.

caroline kennedy and prime minister shinzo of the were there with representatives and ordinary people. the bells rang out at the exact moment the bombs exploded over the city in 1945. president obama has launched his defense of the iran nuclear deal saying that the critics are the same ones for the war in iraq that turned out to be a nonexistent threat. president obama: between now and september you will hear arguments against the deal that by tens of millions of dollars in advertising. if the rhetoric in the ads and the accompanying commentary sounds familiar, it should. many of the same people who argued for the war in iraq are making the case against the iran nuclear deal. francine: the trial of a man who organized the shooting of seo so

the opera cursed -- theo b ronkhurt said he did nothing wrong. cecil was in a protected area and was bored out of the dentist walter palmer to shoot him. he was wounded by an arrow and finished off with a gun. opening today with french president francois hollande attending a lavish party that has been hiked by egypt's government for months. adding an additional lane across part of the shipping channel. ♪ >> it is one of the most trade routes in the world. it is expanding. in the 19th century, the suez

canal took 10 years to build. thousands of workers lost their lives. a 100 and 20 mile link allows ships to travel from europe to asia. authorities say that expansion would raise capacity and shorten journeys. they have not said how they plan to recoup the $8 million spent on the project. a bigger problem is that shipping has dropped 20% since the global financial crisis. global trade volume would need to rise by 9% a year for the suez to reach its traffic goal. francine: up next, commuter chaos as millions of londoners deal with the second tube strike. where will the standoff between mayor boris johnson and unions end?

our twitter question of the day, will super thursday help ease target volatility or confuse key messages from the bank of england. you can tweet me at @flacqua. ♪

francine: welcome back to "the pulse." live from bloomberg's european headquarters in london i am francine lacqua. the second quarter earnings as the makers of football boots struggle for the world cup. the ceo, herbert hiner, is pouring money into marketing to close the gap with nike which has widened its lead over at adidas. a 43% drop in profit after iron ore prices drop.

the bank of england will announce its august interest rate decisions later with minutes of the meeting and quarterly economic forecast. this is the first time the central bank has scheduled a simultaneous release of all data. governor mark carney believes this will make the process more transparent, accountable, and predictable. we are an hour and a half into the super thursday data torrent. let's check in with jon ferro. jon: stocks are lower. down 1/10 of 1% in frankfurt, germany. down the equivalent on the ftse in italy. not much price action in the indices. the ftse is down one half of 1%. the bps of the world, the

anglo-americans are under pressure. the greeks, of 3.23%. we have been chasing it lower this is it moving higher. not a single bank on that list because it has been limited down 30% for the first three days. they're trying to find some of the potential for the stocks. they were down 5%. the greek market is stabilizing for now. in london, we are looking ahead to super thursday. no change is expected, but it is a vote everyone is waiting to see. is it nine-zero or do we get a split with people putting their hands up her rate hikes? we will break down the forecast when we look ahead to the bank of england press conference with

governor mark carney. the sterling has dropped by 70 pence down 2/10 of 1%. this is a strong pound against the euro which is a big trading partner of written. what does the strong pound mean for the economy going forward? to borrow a phrase from kitchen in super thursday, it is super thursday here and in america it is just the day before payrolls. francine: we're joined from new york by tom keene. i know you are looking at oil, and super thursday. tom keene: what i would suggest and jon ferro just mentioned, and intent toward normalization. what the bank of england and the federal reserve are trying to do with all of the new information coming out ahead in our 7:00

top, we will go to you for further coverage from london, but i would suggest they're doing this in no you of fragile commodity prices. jon ferro will be a special guest on the program this morning. francine: that is great. i'm excited about the show. thank you. tom keene with "surveillance." rio tinto has posted a 43% drop in first-half profits to the figure of $2.9 billion beating estimates, but down from $5.1 billion a year earlier. sam walsh: we expect it will be somewhere in the middle between where we are now and where we have been. that applies not just to our commodities, it applies to oil, gas, and a range of things.

as the world looks for efficiency, lower cost, and more efficient investments, that is why we started reshaping the business to and have years ago to meet the expectations of our customers in the market. francine: joining us is bloomberg's energy and commodities reporter. it has affected earnings. rio tinto beat estimates. >> it highlights what's happened in the mining sector. at least a big oil company has the refineries. they could use them to whether the slumping prices. for the miners it is a brutal drop when you have oil prices going down, it slows down. 43% for rio tinto. i have seen the minors, and rio tinto in particular, showing

that they can adapt. cut costs cut investments, and trying to moderate the draft. it is clearly signaling, and get used to it because it won't improve anytime soon. francine: the outlook could be good and less you cut costs. javier: they are keeping the dividends because they want to reward shareholders. this is coming from the cap x. four or five months ago rio tinto was still in new capital expenditure. now they are saying it is only $5.5 billion. they are saying that in the years to come they will keep that number. they are trying to adopt to a situation in which the current prices will remain with they are at the moment. francine: we also heard from her and goal this morning. javier: a different story this morning.

you cannot get away from the fact that commodity prices, when you are looking at coal or iron prices, they're coming down in the same direction at drops between 20% and 60%. companies are struggling to survive these prices. francine: what are we expecting from the hp and -- from the -- from bhp and the rest? javier: i think for bhp it will be a similar story to rio tinto. oil prices and copper prices are down. they should be suffering. bhp is similar to rio tinto. over time this would help them. francine: thank you. tesla fell 9% in extended

trading after the electric carmaker that off of its full-year sales forecast. it is not looking good for the automaker? caroline: elon musk heading up tesla. trying to say we are not going to hit some of our targets because we want a better product, not just to meet the quarterly forecast. you are now getting 50,000 to 55,000 of the model s and x. it is just 5000 but does that mean you will need to reconsider going forward? the 2016 production would be 2000 cars being made per week now it will be 1600-1800. bringing back the enthusiasm and pushing the stock downward.

will they be raising more capital? could you be diluted if you are a shareholder? he said at the moment there is no need to raise equity capital, that there might be value in a risk reduction perspective. that door is left open and that concern is in investors mind. they are raining back because of supply they say the model x the new suv, is probably the hardest car to build in the world. it will hit the model s. they have one assembly line. if you only have a week's delay that is 800 vehicles they have to pull back in terms of levels of production. they sounded slightly optimistic about the model x. it was meant to be online in 2013, then 2014, then finally by

september. that was reconfirmed. musk is still feeling that cash flow positive will come by the first quarter of 2016 at the least. they are also diversifying. does does not only mean -- tesla does not just mean luxury electric cars, it means electric batteries. the giga factory could be rolled out next year. this is about more jewels packed -- more jules packed. the next idea, we know elon musk is a dreamer and makes those dreams a reality. think of his rocket. what about driverless cars? could he supply them to uber? good he unleashed his own platform and take on an uber.?

he did not say no. he said, and insightful question, i will choose not to answer. francine: i love when they say i'm a that is a great question but i will not answer. ♪

>> they're very low level of rates that we will continue. you want to defy actions on the cost side to maintain our target. maintain the cost and having some ideas about business, i cannot make a specific anticipation. francine: that was the ceo of italy's biggest banks on cutting costs to revise profits. second-quarter earnings have missed estimates. a deiters is struggling to meet demands. this -- adidas is struggling to meet demands. this as they struggle to close the sales gap between rival nike.

>> the bar was set high. they missed income estimates by one million euros. sales are trading north of 1%. revenue came in better than expected. they came in 3.93%. they have hinted they may be selling tailor-made. this is a big drag on the company and they have needed a strategy for a while. they are pursuing options. looking at revenue, this is adjusted for foreign exchange, adidas gets hit with quite a bit with all of their pressure exposure. reebok is up 6%. adidas is up 8%. tailor-made is down 6%. last year it had 913 million in revenue. this has been declining. how much of a revenue they will get, it looks like the market likes the idea that they are selling it.

adidas versus nike, they want to focus on having more play in the united states. they want to go to trend setters in cities like new york, los angeles london, and paris to develop trends. they're going to have handmade and custom-made shoes in the stores and a couple of years. that is new. now we can get guy johnson suits and running where. -- running wear. francine: last night they announced they are acquiring the app runtastic. what do they get? hans: a lot of users. under armour spent $560 million last year buying apps.

adidas is now getting into the game. they basically are coming to the game late but buying a bunch of users. we will see how well they integrated into a shoe and apparel company. francine: thank you. hans nichols in berlin. fans blunders are dealing with the second tube strike. -- londoners are dealing with a second tube strike. >> mayor johnson: londoners would be amazed that this is not being properly considered by the work force. it is a great deal. hiring 137 drivers. more jobs, more pay why not?

and delivering a 24 hour to the london. >> i think there are plenty of games going on here. you have two possible candidates for leadership. they have not sort it out when they are going to do an essential and safety maintenance. even if we agree to everything this could not go ahead. francine: benjamin katz is here with the latest. benjamin: this is ending a long-standing policy for the mayor of london not to meet with unions. we're waiting to hear if that develops. otherwise, there is no sign of a resolution. we know that the stock data is september 12, but the union

rejects it. francine: why was it rejected? what was in the offer they were on pleased about? benjamin: the first thing is that there is a wide spread closing down of ticket offices in the london underground. they say it is unnecessary to have ticketing offices and we can replace them with automated machines. the other part for the train drivers is the work/life balance. they want to have a normal life and maintain a life with her family and kids. they rejected the offer which is not so bad when you get down to it. francine: in the bigger picture other cities are doing it. it would involve more a, so i do not know if they could hire more people. what is the impact? benjamin: london does want to become a 24-hour city. it is just for the weekend.

we are talking about a nighttime chipped on -- a nighttime shift on some weekends. the first thing they have promised is that there would be no increase to the 36 hour working week as well as 43 vacation days a year and above inflation hikes as well as increases for the next years. there is concern about control that they will have in input. francine: thank you so much for joining us. continuing china's appetite for global taste is being satisfied next to the world's longest railway that runs to western europe and opening new opportunities through speed and security. >> all aboard the silk rail. it links china's eastern shores to the iberian peninsula and carries the best of europe. as william shakespeare said,

sherry is the sunday of spain bottled. a train full of spanish sundaes traveled all the way to china. although oil is also destined to newly wealthy consumers in china. >> we offer these products to popularize status culture and cuisine. when they arrive in china we find agent to distribute them to raise their image. >> the european trade link is key for china and economic developments. previously the only real service only ran to germany. this means that china is spain's largest trading partner outside of the eu. the journey is 13,000 kilometers across 8 countries and takes between 18-20 one days, but it saves 10 days in time

and that is more secure than going by see. -- going by sea. >> if those places were destabilized it would have a negative impact on china's growth. >> putting a container on the train costs $5,000 more than taking it by sea. some would say that is a small price to pay for spanish sunshine in a bottle. francine: all right. stay with "the pulse" -- coming up, what to watch. the bank of england as they prepare for and unload of data simultaneously. ♪

francine: welcome back to "the pulse." live on bloomberg tv and streaming on the ipad and bloomberg.com. we are joined by hans nichols in berlin. super thursday in the u.k. and the republican debate in the states. hans: one of them has a media con -- has an effect in the media, the other will be -- we will get the minutes, the rate decision, expectations on

inflation. we will see a there is one or two to sense on if there should be a rate hike immediately. a lot of that is to consume a process. i am looking at central european time. it is an hour away. francine: we have been talking about super thursday. the build up is not only that it is a huge torrent of data, but it comes at a time when there is already a shift leading to a possible interest rate hike. around the world, bankers find it tougher and tougher. we see moderators -- modernization from the fed to the ecb. hans: for all of the traders shifting through this, i will flow back for them for five minutes, then i will look at their paycheck at the end of the year then i will not feel bad

for them. francine: that is a good way to look at it. that is it for "the pulse." stay tuned for "surveillance" coming up next. then we have a special show on super thursday with the bank of england. ♪ . .

>> this is "bloomberg surveillance." tom: mark carney and the bank of england consider raising rates amid a global slowdown and a commodity implosion this morning. a delicate balancing act in london.

a media meltdown as the highest of high fires -- tinkerbell comes down to earth. is it possibly the biggest presidential debate since nixon-kennedy? will the real donald trump show up? good morning, everyone. this is "bloomberg surveillance." we are live from our world headquarters in new york. thursday, august 6. i am tom keene with brendan greeley and vonnie quinn. i have got goosebumps over this debate. it is a big deal. brendan: you asked the right question batch will be real donald trump show up? he has said i will not attack if they do not attack me, but the second anyone opens up, i will fight. he can afford a fight anyway they cannot. it will be interesting to see who starts the fight first. tom: we will look at the debate bloomberg politics, thank you. right now, what a day it is. let's look at top headlines. here is vonnie quinn. vonnie: thanks, tom.